5 Ways to Improve Your Credit Score

Credit is one of the most important components to your financial life. If you are like myself and many others these days it is more important now than ever to keep your credit scores in check.

We all have three credit scores or FICO scores, which come from each one of three credit bureaus:

1. Equifax
2. Experian
3. Trans-Union

Credit scores have a range of 300 to 850 and just a few short years ago if you had a 720 credit score you had the "Midas Touch" because you were as good as gold. You could get the best that credit could buy. All the banks would be offering you the best loan offers. Unfortunately, the current economic crisis has compounded the credit crisis and now some banks and mortgage lenders are looking for scores of 740 to get those premium rates. If your not planning to buy a home anytime in the next year don't even sweat it unless you don't have a credit score of 720. If your credit score isn't 720 or better, here are 5 steps to improve your credit score:

1. Pay Your Bills on Time - This can account for 35% of your credit score. If you are late on any of your bills, including credit cards, your score will go down. By paying at least the minimum due your score will improve.
2. Reduce Your Balances - This can account for 30% of your FICO score. The less debt you have, the better you look to lenders.
3. Keep Credit Cards That Have a Long Credit History - This accounts for 15% of your score. The more credit history FICO has on you the better. This enables them to determine if you are a good credit risk. 
4. Don't Apply for any New Credit - This accounts for 10% of your score. If you apply for multiple credit cards or car loans you will bring your score down. 
5. Have a Mix of Credit - This accounts for 10% of your credit score. It's good to have different forms of credit. Having a mix of credit such as, credit cards, car loans or a mortgage shows you can manage different types of  credit. 

Follow these 5 steps and you'll have a credit score of 720 or better in no time.

[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]

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